ClearBridge Investments Expects Huge Growth in Hess Corporation (HES) as Guyana Production Scales

ClearBridge Investments, an investment management company, released its “ClearBridge Value Equity Strategy” second quarter 2022 investor letter. A copy of the same can be downloaded here. In the second quarter, the fund underperformed its Russell 1000 Value Index. The fund faced losses from all the 11 sectors, in which it was invested. For more information on the fund’s top picks in 2022, please check its top five holdings.

In the second quarter investor letter, ClearBridge Investments discussed added stocks like Hess Corporation (NYSE:HES). Hess Corporation (NYSE:HES) is a company that operates in the energy sector and engages in the exploration, production, transportation, and distribution of crude oil and natural gas, and has a market capitalization of $32.197 billion. The stock of Hess Corporation (NYSE:HES) closed at $103.99 per share on August 8, 2022. One-month return of Hess Corporation (NYSE:HES) rose to 9.95%, and its shares gained 43.22% of their value over the last 52 weeks.

Here is how ClearBridge Investments specifically discussed Hess Corporation (NYSE:HES) in its Q2, 2022 investor letter:

Hess Corporation (NYSE:HES) is one of the premier growth names in the energy sector. The company is exercising discipline in not hastening growth beyond its capabilities, as Hess’s massive Guyana oil production scales. Growth in energy has often been a double-edged sword, as exploration companies tended to grow production and burn cash. In the current environment, producers are increasingly focused on maximizing free cash flow and driving good returns on capital. As Guyana scales, Hess will have one of the fastest growth rates of free cash in the overall market, even if oil settles well below $100. This will allow the company to grow its business value at a double-digit rate over the next several years, a reality not captured in the current price. During 2022, Hess earnings estimates rose over 100%, but its valuation multiple fell over 30%. We think energy earnings and cash flow will be much more resilient than the overall market. We actively welcome the market’s skepticism, as valuations in the entire energy sector remain near historic lows despite great fundamentals. Finally, Hess’s Guyana oil will have some of the lowest greenhouse gas intensity of any oil currently produced, and these relatively clean and growing barrels will be needed by a world that is structurally short oil.”

Photo by Zbynek Burival on Unsplash

Although ClearBridge Investments invested in Hess Corporation (NYSE:HES), it is not on the list of 30 Most Popular Stocks Among Hedge Funds. As per our database, Hess Corporation (NYSE:HES) was held by 40 hedge fund portfolios at the end of the first quarter which was 36 in the previous quarter.

We discussed Hess Corporation (NYSE:HES)  in another article and shared the best cyclical stocks to buy during inflation. You can check our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other prominent investors.

Disclosure: None. This article is originally published at Insider Monkey.

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